Title: Oil prices dive as U.S. considers record reserves release

Mar 31, 2022 03:20AM ET

By: AnalysisWatch

Oil prices plunged on Thursday on news that the United States is considering releasing up to 180 million barrels from its Strategic Petroleum Reserve (SPR), the largest in the SPR's nearly 50-year history.

By 02:37 AM ET, Brent crude futures for May were down $4.11, or 3.6%, at $109.34 a barrel by 02:37 AM ET. The May contract expires on Thursday, and the most-traded June futures fell $4.36 to $107.08, after dropping more than $6 earlier.

US West Texas Intermediate futures for May fell $5.33, or 4.9 percent, to $102.49 per barrel after hitting a low of $100.85 earlier in the day.

U.S. President Joe Biden will comment later on Thursday on his administration's measures aimed at lowering gasoline prices, which have risen to record highs since Russia's invasion of Ukraine.

Goldman Sachs analysts said in a note. Such a release would help the oil market rebalance in 2022 by increasing supply by 1 million barrels per day (BPD) for six months.

A spokesman for New Zealand's energy minister said on Thursday that IEA member countries will meet at 08:00 AM ET on Friday to decide on a joint oil release.

News of the possible US release overshadowed a meeting scheduled for Thursday between the Organisation of Petroleum Exporting Countries (OPEC) and its allies, including Russia. The group, known as OPEC+, is expected to stick to its agreement to gradually increase oil production.

Releasing oil from the US could help reduce wild volatility and limit sharp upward moves, but prices need a long-term solution, said Avtar Sandu, a commodities manager at Phillip Futures.

Oil prices rose about 3 percent on Wednesday as peace talks stalled between Ukraine and Russia, which has described its actions as a "special operation".